Downgrading your Chase Ultimate Rewards Card to Avoid the Annual Fee

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This is post #4 of a series regarding the Chase Ultimate Rewards program.

So you have the Chase Sapphire Preferred, Chase Ink Bold, orChase Ink Plus card (or maybe all three!) and your one year mark is quickly approaching. You got the card due to the great sign up bonus, and do not really foresee $95 a year being worth keeping it. You are not planning on using this as your every day card. You are now debating – to cancel or not to cancel? While you do not want to pay the $95 fee, you also do not want to close the account as it will impact your credit (slightly, but nonetheless, will have an impact). Remember, building your credit history is important as well.

Most credit card companies do not advertise this, or is it talked about often in travel blog world, but you can downgrade your card to a no fee card. For the Chase Sapphire Preferred card you can downgrade to the Chase Sapphire card (non-preferred), for and for the Chase Ink Bold card you can downgrade to the Ink Classic Business card. Both of these cards have NO annual fee and thus can stay in your wallet forever (or in the back of your sock draw for all I care)! Your credit will not be impacted – no hits for a new credit card and no hits for closing an account.

But before you go run and do this, there are some important things to know:

You will no longer be able to transfer your Ultimate Reward points to loyalty partners

You will no longer get the 25% bonus when using your points as as the “pay for travel” option

The downgraded cards have foreign transaction fees of 3%

You will no longer be able to apply for the no fee version cards and receive the sign up bonus (which is currently 25,000 points, but there have been previous 50,000 point offers – I’d go for other Chase cards over a 25k bonus though)

What will you get:

The same points on many bonus categories (i.e., 2x points on dining on the Chase Preferred card and 5x points on office supplies on the Ink Classic Business).

Access to Chase Ultimate Rewards for their online shopping portal

Ability to transfer points to other accounts

Ability to transfer points to partner/spouse accounts

So now some tips – if your partner/spouse has the Chase Sapphire Preferred, Chase Ink Bold, or Chase Ink Plus you can transfer your points earned from the downgraded cards to their account. They can then transfer the points into a loyalty partner in your name. So while you cannot directly transfer your Ultimate Reward points to a loyalty program, this roundabout way will allow it! This is similar to the points earned from the Chase Freedom card I wrote about here. This is only useful if you decide to use the downgraded card sporadically and earn points. And even if you do not use the card, you can still use their online shopping portal, which it times has some amazing bonus promotions! Now, some have had luck transferring to a friends/other family members account as well, but Chase has been known to close accounts, even though nothing is really written in the T&C about this. The discretion is yours, but they have authority to close accounts and give you no reason.

Now if you do not want to involve family/friends, if you have both the Preferred and Ink Bold card, you can just downgrade one of them and still have the option to transfer points to a airline/hotel. This will also leave you with a card that has no foreign transaction fees.

Note that I am by no means advocating cancelling the card. I personally think that the Chase Sapphire Preferred, Chase Ink Bold, and Chase Ink Plus card are great go-to cards for every day spending, especially when coupled with the Chase Freedom. Their are some great perks to this card and I can only foresee it enhancing going forward!

Key Links:

Chase Sapphire Preferred – 40,000 bonus points with $3,000 spend in 3 months plus an additional 5,000 points when you add an authorized user and the user makes a purchase within the first 3 months; $95 annual fee waived the first year

Disclosure: This post contains affiliate links where I get paid a small commission if you apply and get approved for a credit card. I will only list the best credit card offers as my goal is for you to travel for free!

Its nice to finally see a blogger give the full picture on how to make CC ownership come around full circle….the end goal after all the points and miles should be to be able to keep the account open forever thus building your credit history in a positive manner and doing so by avoiding the annual fees.

Note that despite the downgrade precluding you from a sapphire regular sign up bonus, one should consider the possibility of getting the preferred and the non-preferred in the same year and then attempt a downgrade, perhaps yielding 2 accounts of the non-preferred (low probability of chase allowing this – but worth trying).
Also note that missing out on a non-preferred sapphire bonus is not that big a deal, esp if its only 25k, and mostly due to all of the other valuable CHase CC deals out there, including, Onepass plus, UA/CO explorer, southwest, BA, hyatt, PC, and others. If anything, there are more than enough chase cards out there, more than most can apply for and have in a less than 2 year time span under their rules.

@Dan – Thanks! It would be interesting to see if Chase allows you to have two of the no fee cards, anyone have any experience with that?

I also agree with you on the bonus points from the non-preferred sapphire card. Right now it is not worth opening up a card for 25k bonus points. There are many other cards out there with far better sign up bonuses.

@Mike – so sorry to confused you. I would absolutely move your points prior to downgrading, as stating in the post. If you decide to continue to use the downgraded card, those points earned can then be transferred to a friend/family member and then transferred back into your loyalty program account. Or, if you just use the UR portal for your online shopping purchases and earn points from here, those can then be transferred. I updated the post slightly to clarify. Please let me know if this helps!

I see lot of people saying chase sapphire is the best card for travel but what about citi thank you? If you book a round trip between ORD-SFO you will get the base miles and also the miles flown as thank you points. This sounds like a better deal than using chase cards. Ofcourse citi does not have any partners to transfer but it seems like a good deal just for flight bookings.

@Sumanth – The Citi ThankYou card is okay. It gives you a flat $665 towards travel. However, the Chase Sapphire Preferred, for example can be transferred to Hyatt and redeemed for two free nights in Paris, where the going rate is about $700/night. It will then still leave you with 6,000 unused points. However, it really depends on how you travel. If you are using the Ultimate Reward points to transfer to Continental for 2 domestic round-trip tickets that would have only cost $300 anyways, then Citi will be more valuable (and you will earn the miles as well). If you are looking at expensive hotels and flights, then Chase Sapphire Preferred is a better option, but if your goal is to take some inexpensive domestic flights Citi is not a bad option. Remember though, the Chase Sapphire Preferred card can also be used towards travel (in the same manner as Citi ThankYou), but will only give you $625 towards travel. So while it is a $40 loss, it opens up many many more options. Chase also has no foreign transaction fees and a 7% yearly bonus (for the preferred card). So the $40 loss if you are planning on using to pay for travel, will almost be made up with this 7% bonus. The 7% on the 50k sign up bonus will give you $35 towards travel. If you are just going to get one, my pick would be the Chase Sapphire Preferred (over the Citi ThankYou).

1- Why not apply for the no fee card and get the 25,000 bonus AND then transfer your other points to this card before canceling. You would take the hit from closing an account but you have to weigh that cost individually.

2- If we all close out our Sapphire cards can we apply for them again in a few months and get the bones a second time? That also may have a bearing on which way your readers decide to go with this. Very timely by the way as I bet there are a lot of people who signed up around March of last year and are all in the same boat here.

@Pointasaurous #1: You absolutely could do this. This would get you the 25k bonus points and no its for cancelling. You would however get a hit for a new application. I personally think there are better cards out there than 25k Ultimate Reward points, especially since Chase has started to be slightly stingy on approving too many applications. But yes, a way to downgrade, avoid the fee, and get 25k points.

#2: They say it is a one time bonus, but let me get back to you on the exact time frame for being able to re-apply for a new card and receive the sign up bonus. It definitely is way more than a few months 🙂

I thought about this and always concerned about losing transferability, which is probably the most valuable reason to keep the card. But I am on the fence. Fortunately, Milewise is a great site (if accurate) to determine what you can get toward the transfer. Are there other tricks to trying to like using a lower card to hold your points, close the Chase Sapphire Preferred card and reopen a year or 2 down the road?

Nice post! I was planning a similar one, but yours is better. I would just add, as I think HikerT is suggesting, that if you can afford a credit hit you’re better off applying for the no fee card so as to get another sign up bonus and then cancel the Ink Bold or Saphire Preferred. Of course many people have already pushed their Chase apps to the limit so this might not be an option for you

Something else just hit me, parke points can be lost if there is no activity in the account. I believe (can someone verify this) that if you moved your points to Hilton to park them, if there were no activity in that account for a year they would be forfeited. This would create the need for yet more recording keeping to track this aspect of the points game.

@Pointasaurous – Like anything else, need to see what works best with your travel. I wouldn’t move points over to a place if I did not know I would use them. Just remember though, Hilton is not a transfer option.

Great post! I just don’t understand one thing. I have used almost all of bonus points from my Chase Sapphire Referred. All i have is about 5,000 points. In November i will have one year since i was given that card and i want to avoid the 95usd fee by downgrading it to the chase freedom. Will i lose the 5,000 points by doing this?

@Chechare – I’d suggest opening a Chase Freedom card to get the bonus 10,000 points (as long as you are comfortable opening another credit card) and transferring the points from the Chase Sapphire Preferred to the Chase Freedom card. Then close the Chase Freedom card. If you downgrade, I am not 100% sure about the points transferring, but I will find out and get back to you.

I have the Chase Preferred, husband is ready to cancel his .. already transferred points to me.. so now why would he downgrade to Chase Freedom and not take advantage of the application with bonus of 10k?

Please note, you can NOT transfer points between different Sapphire Preferred accounts (i.e. to friends and family)- it’s against T&C’s. They author is wrong- Chase only allows UR point transfers to spouses and/or domestic partners or you risk having Chase close your card or your UR account. I’m not sure if points can be transferred from a non-preferred Sapphire to a Sapphire preferred between friends/family as this article claims, but I’d think it’s only between spouses/domestic partners (if that)

My husband has spent about $62K in the last year on his Chase Ink Bold. I am an account manager on his acct. I called and tried to get the annual fee waived or atleast get some points. No dice. Then I secure message them (from him, ;). They wouldn’t budge. They let him close the acct without any offers. I couldn’t believe, any retention offers. I have the Chase Ink Plus, Sapphire, and plenty of other chase cards. He has a couple of chase cards. How long should he wait before applying for the chase ink plus?

Confused the assertion that closing a card hurts your credit. It might (utilization could go up) or I think it might improve your credit in the likely event that the average age of your accounts goes up?

@dino- when you applied originally, did you use an EID or your SS. You might be able apply with the other one now and get approved. I know folks who have had success with this due to wanting to keep expenses separate.

Same thought process. I have CSP and Freedom visa. Now I would like to downgrade CSP to say Freedom MC. Not sure if it will be approved. But I guess this would be ideal for me. Any thoughts of this becoming a reality?

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About Jen

My passion (and obsession!) for travel deals and points started over nine years ago the day I graduated college and took a job in management consulting. I’d spend every Monday through Thursday hotel hoping and embarking on long plane rides just to earn the extra points and miles. Since I was traveling all the time I decided that I was really going to take advantage of the points and miles game... Learn more about Jen »

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